CONSOLIDATED DIVERS GROUP INC v DIRECTOR NEW SOUTH WALES DEPARTMENT OF FISHERIES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, POWELL and STEIN JJA 18 December 1998 [1998] NSWCA 62 Meagher JA This is an appeal from a decision of Dunford J concerning the abalone fishing industry by some fisherman who were disaffected by His Honour's decision. At the outset I should mention that I agree with his Honour's decision, in all but one particular. In order to understand the effect of his Honour's judgment it is necessary to understand the legislative background. The fishing industry of New South Wales used be governed by the Fisheries and Oyster Farms (Management) Act 1935. S24C required all fishermen to be licensed. S22A authorized the Minister to declare that fish of a specified class were a "restricted fishery"; required all fishermen fishing for fish belonging to a "restricted fishery" to have a special permit in addition to their ordinary licences; prohibited the fishing for fish belonging to a "restricted fishery" by other persons; enabled the Minister to fix the maximum number of permits to be granted; and enabled him to fix the number of fish which may be taken in any specified period. Abalone were declared a "restricted fishery", with 57 as the maximum number of permits for that fishery. In 1979 the Government decided that maximum number of permits should be reduced from 57 to 29, and to enable this objective to be achieved introduced a "two-for-one" scheme. This scheme required a new entrant to the industry to find two current permit holders who were willing to surrender their permits in favour of the new entrant. The simple transfer by one permit-holder to a new entrant was not permitted. When two permit-holders were willing to surrender their permits in favour of a new entrant, the "original" permits were cancelled and a new permit, called a "consolidated" permit was issued. There were two, inevitable effects of this scheme: one was continually to reduce the number of permit holders, in pursuance of the policy of going from 57 to 29 and in fact reaching their present number of 37; the other was to increase the value of a "consolidated" permit to nearly twice that of an "old" (or "original'"') permit. The appellants are all holders of what used be called "consolidated permits", but are now called "consolidated endorsements". In order to restrict still further the number of abalone being caught in New South Wales waters, in 1989 a quota system was introduced pursuant to s22A(3) of the 1935 Act. This was effected by conditions endorsed on the permits. Initially, the quota was ten tonnes per diver per year, later reduced to nine tonnes; the quota was the same for original and consolidated permit holders. In 1995 their came into force a new Act, the Fisheries Management Act, 1994 and new regulations. Insofar as the abalone industry is concerned in many respects the new Act and regulations left things much as they were. As his Honour said: "These provisions therefore substantially reproduced the previous provisions, subject to some change in terminology. In particular, abalone remained a "restricted fishery", the holders of permits under the old regime became the 2 UNREPORTED JUDGMENTS holders of endorsements under the new, the quota that might be taken was fixed by reference to the TAC and remained equal between holders of consolidated and original endorsements and the previous two for one system was retained, so that for any new person entering the industry had to procure the surrender of two original or one consolidated endorsement(s)." However in one respect it introduced a major change. In Pt3, s41-s101, it dealt with a novel concept "Commercial Share Management Fisheries". It provided that, subject to certain procedures, the Minister could specify certain fisheries as "Share Management Fisheries", which having been done fishermen could apply for, and the Minister could issue, shares. The method of determining eligibility and entitlement to shares is governed by s50, which, so far as is material, is in the following terms: "50(1) The determination of the person eligible to apply for shares in a share management fishery and their entitlement to shares is to be made in accordance with this Division and the criteria specified in the public notice inviting applications for shares. (2) Shares in a fishery are (subject to this section) to be allocated to persons who are the holders of current commercial fishing licences or fishing boat licences and who lawfully took fish for sale in the fishery before it became a share management fishery. If the fish were taken as an employee of some other person, the allocation is to be made to that other person. (3) Shares are (subject to this section) to be allocated to eligible persons in proportion to their catch history in the fishery. If more than one class of fish was caught in the fishery, the allocation is to take into account the value of each class of fish that was part of the catch history. (4) If a restricted fishery becomes a share management fishery, the persons entitled to shares in the fishery are the persons who, immediately before it became a share management fishery, were entitled to take fish for sale in the restricted fishery. The allocation of shares to any such persons may be made having regard to existing entitlements in the restricted fishery." This case is fundamentally about s50(4). On 24 February 1995 the abalone restricted fishery was proclaimed a share management fishery; invitations to become a shareholder were circulated, but limited to those fishermen who held endorsements in the abalone restricted fishery. In due course 100 shares were issued to each of the 37 persons who fitted that description. It will be noticed that no distinction was drawn between "original" endorsees and "consolidated" endorsees. Indeed, about this time an effort was made to effect by regulation the abolition of the two-for-one scheme which gave rise to that distinction, but to no effect as the regulation was disallowed by the Legislative Council. I might add that heated representations were made to the Minister by both lobbies (the "original" endorsees and the "consolidated" endorsees) for and against the proposition that all endorsees be treated equally, the "original" endorsees advancing that proposition and the "consolidated" endorsees rejecting it, and advocating a different treatment. The present appellants, "consolidated" endorsees, submit that the Minister had no option but to treat the two classes differently from each other, as otherwise there is no regard to the meaning of the word "entitlement". The right to sell - at a price roughly twice that of an original endorsement - is part of the "entitlement" of a "consolidated' endorsee. Thus, so the argument runs, the Minister in deciding to issue each endorsee with 100 shares had no regard to the real "entitlements" WRONSOLIDATED DIVERS GROUP INC v DIRECTOR NEW SOUTH WALES DEPARTMENT OF FISHERIES (Stein JA) of the endorsees. In my view, this argument is misconceived. It is no doubt true that the acquisition cost of a "consolidated" endorsement twice that of an "original" endorsement; and it is also no doubt true that, as matters stand, one can get, for the sale of a "consolidated" endorsement, twice the amount which one could get for an "original" endorsement, but, to my mind that does not constitute an "entitlement". In the context of s50(4) "entitlement" surely refers to the things which the endorsement entitles one to do, and if one reads any of the endorsements all it says one is entitled to do is catch abalone fish up to a certain quota, which quota is the same for all endorsees. In issuing 100 shares to everybody, therefore, the Minister was indeed "having regard to... existing entitlements". That this the correct meaning of the word "entitlement" is further demonstrated by 1) the fact that there is a mandate to issue shares to those persons whom "were entitled" to take fish for sale (emphasis added). Nor could it be suggested that the Minister paid no attention to the distinction between the two types of endorsement: he must have known of the debate between the two factions, if for no other reason because he was present when they debated the matter. Indeed, I would be minded to uphold the respondent's submission that, the meaning of the word "entitlement" being clear, the Minister would have no power to allocate shares on any basis which took into account the difference between the two types of endorsement. The appellants also submit that the disallowance by the Legislative Council of the regulations to which I refer had the result of invalidating the Order made under s53 proclaiming abalone fishing a "share management fishery". There may have been more outreé submissions made to a Court, but it is difficult to think what they were. Unsurprisingly, no authority was cited in support of it. There is nothing in s53 which suggest that any regulation is necessary to give legal effect to an Order made under it. It is logically possible to give effect to a s53 Order short regulations, as indeed it would be to give effect to regulations without an Order. In my view the appeal should be dismissed with costs. Powell JA I agree with Meagher JA. Stein JA I agree with Meagher JA. Appeal dismissed with costs. Counsel for the appellant: R Gyles QC/M Smith Solicitors for the appellant: Kennedy & Cooke Counsel for the first second and third respondents: J Griffiths Solicitors for the first second and third respondents: Crown Solicitor Counsel for the fourth respondent: R G Gillard QC/Dr Renwick Solicitors for the fourth respondent: Higgins Teale